Editor's note: Industry attorney Steven Hansen shared the following analysis of this week's administrative decision by the Consumer Product Safety Commission, which found that Amazon should be considered a distributor of the products it sells, and is therefore responsible for the safety of the products. Hansen's website is www.swhlaw.com.
This is a very critical administrative decision by the Consumer Product Safety Commission. This case was brought by the CPSC against Amazon in July of 2021 and was just resolved this July 2024. I suspect Amazon will appeal this decision to a federal court as it's a big decision against Amazon.
What we find interesting and enlightening for our readers is two points.
First, Amazon argued before an Administrative Law Judge and the Commission that it was not a "distributor" and thus bore no responsibility for the safety of the products sold under its "Fulfilled by Amazon" (FBA) program.
Secondly, this is a reminder to all distributors and retailers out there in consumer product land that the CPSC regulations place a legal recall obligation on all entities in the chain of distribution of the product. This means if the brand (in the USA) or the manufacturer (usually in Asia and usually will not initiate voluntary recalls) does NOT conduct a recall, then you (the distributor, importer or even main retailer) may have the obligation to do so as the next entity down the chain.
CPSC regulations place a legal recall obligation on all entities in the chain of distribution of the product
The recall obligation is generally when any product does not comply with a federal safety law (ie 16 CFR 1512 et seq) or when the product may comply with a federal regulation but still contains a "substantial product hazard." Amazon knew the second point and so it just tried to argue it was NOT a distributor.
What we find interesting is that the Amazon case was filed about a year after California's watershed decision also held that Amazon was a "distributor" or "seller" in its FBA programs. (FYI the appeals court judge that wrote that opinion is now the Chief Justice of the California Supreme Court, if that tells you something).
Given what is at stake for Amazon expect this to be appealed and as all states and federal districts are not aligned on this issue for Amazon being a true distributor the district or judges where this appeal is heard will be critical.
